Charting Hedge Funds' Abysmal 2011 Track Record And Mid-November Performance Update

Tyler Durden's picture

2011 has not been good for hedge funds: as the following chart from Reuters shows, this will be the first year of many, possibly ever, in which the average hedge fund had a negative return, even as the broader market had a minimally positive return, although there are still a few more trading days in the year so the S&P could well close negative. No doubt this collapse in returns will be blamed on this and that, yet we can't help but wonder how in the "New Hedge Fund Normal" in which fundamentals no longer matter and alpha is irrelevant, in which what does matter is which central bank prints and how much and who can get more levered beta, in which "expert networks" and "information arbitrage" are a thing of the past, in which every phone conversation is tapped and in which your friendly state DA just wants to bust some hedge fund ass to make that governor bid easier, will hedge funds ever return to their old prominence? And if they can't, just what will happen to that ultra critical $2 trillion marginal purchasing power, levered 3 times, which has traditionally been the driving force for market moves higher? 

And a full mid-November hedge fund return update:


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BrocilyBeef's picture

In Soviet Russia, funds hedge YOU!

spiral_eyes's picture

Soviet Russia kidnapped the old Paul Krugman and replaced him with a Politburo-approved alternative.

WhiteNight123129's picture

Shit, that´s really bad. That means he knows exactly that the USD is utterly fucked. He could talk about it as a possible outcome, but now that it is almost certain he wants to calm the shepple as much as possible. Seing this old article is terrifying, who is left to disagree? I guess Roubini bought some Gold on the very he was teasing the Gold and Silver bulls. Fucking hypocrits.



ThrivingAdmistCollapse's picture

The Dollar could totally collapse.  Right now I think all TPTB are just trying to keep everything running for as long as possible while they are making preparations behind the scenes.

Larry Dallas's picture

This made me spit beer out of my nose. Sophomoric humor, I know. But I found this very funny. Thank you for not ending the first post of this article with "Bitchezzz".

El Viejo's picture

... and another one's gone. Another one bites the dust. Doom doom doom another one bites the dust. Doom we're gonna get to you...

DormRoom's picture
Hedgies’ average return is ‘zero’ The hedge fund industry delivers risk-adjusted returns of essentially zero, after fees, according to an innovative academic study.


why do ppl pay 2 and 20, for no alpha? Especially no alpha in down markets, which managers should be hedged against.

Irish66's picture

but Cramer said he was listening to the best, who the hell is that?  The

dvduval's picture

Maybe we are realizing investment banks and hedge funds don't lead to increased productivity? A wooden stake and a vampire killer would do better than any hedge fund.

Mountainview's picture

But investment banks work with much more leverage=risk

Zola's picture

Easy explanation-Bernanke . This fucker is grossly distorting the market.

CvlDobd's picture

I agree. Fundamentals? Ha! Not with the 500 at 1250!

Formerly reliable technicals aren't working for me over the past few years.

I think there is true talent in some of the funds. Only the real bright managers are doing well this year. I'm impressed by the strong performers this year.

DavidC's picture

Quite. For legitimate investors (pension funds etc) as well as hedge funds. No sane investor will want to place money into a stock market that is propped up purely by Central Bank and Government intervention and manipulation.

And the exchanges wonder why volumes are so low (other than the HFTs) and money is being withdrawn.


SK8boarder's picture

And if they can't, just what will happen to that ultra critical $2 trillion marginal purchasing power, levered 3 times, 

Is this really true, 3 times Levered, 


Mountainview's picture

Look at the total balance sheet to shareholders equity ratios of banks. It's more than 3 to 1 in all cases!  

Amused2Death's picture

Somebody's making money this week, sometimes you scratch your head but these guys are intent on showing a positive Dec/year...

aminorex's picture

Indeed there are several hedge funds which are positive and outperforming the market.  Of those funds, the ones which have the highest reward/risk ratios will claim the majority of the funds which the underperformers will disgorge over the next few months.  If you're looking for employment, look no further than that short list.  If you're working at one of the underperforming funds, then it's time to start looking, or start your own business (whether it be managing investments or oysters).

Zero Govt's picture

It appears the 'Optimist from Omaha' has lost his magic touch... Berkshire Hathaway is down -10% in 2011.. all those State aided 'investments' turing a bit sour Warren?

...just wait to see what the Bear-Trap has waiting for you on Bank of America and the 100 years past its Sell-by-Date train set you bought "Investment in America" ...only trouble was you picked the worst parts

it's 'toast' for the Buffet breakfast

Dr. Engali's picture

It couldn't happen to a better hypocrite klepto.

Nietzsche's picture

do you really think the fbi wiretaps are gonna stop the hedgies? They will be drinking gin martini's on a beach in the caymans using morse code 

kelpie-capital's picture

Hedge Funds forgot to hedge. Gross & Net Exposures are still pretty high from what I last saw, they don't seem to have learned much of a lesson, unless of course the market races ahead.

A lot of what I believe to be the best funds are positioned much more conservatively. From a macro perspective, not many beat Bluecrest or Brevan Howard and they are both extremely conservatively positioned.

2012 Outlook:

Zola's picture

the only funds that did well this year were those that embraced the safety trade as bonds. Bernanke made sure to reward these loyal followers. Lets see how long you can keep the charade going Bernank - see you in 2012.

Alchemist's picture

Seriously though, judging by the market timing record of zerohedge had Tyler been running money he'd be down at least as much as Paulson.. This site has been perma-bearish for years... Clearly, a case of "those who can't make money - write"